Moe Rouse, who owns Mannequin Boutique in Over-the-Rhine, donates all her store’s… more

Bruce Crippen | courier

“If a woman gives me a $700 bag she has never used, that’s not a cute donation,” Rouse said. “That’s being a philanthropist.”

Mannequin is one of a growing number of local businesses where customers can eat or shop to benefit a good cause.

The boutique, Roc-A-Fellas pizza in Sharonville and New 2 You Thrift Store, with locations in Mason, Hamilton and Uptown, are among several local businesses established specifically to generate profit that they give away to charities and nonprofit organizations. And while more nonprofits nationwide are establishing their own businesses – or social enterprises – to generate revenue, starting a business specifically to generate profit for charity remains uncommon, experts say.

“Some do that very prominently, like Newman’s Own,” said Jim Schorr, professor for the practice of business and society at Vanderbilt University’s Owen School of Management, referring to the Connecticut food company that has given away more than $300 million to thousands of charities since its founding by actor Paul Newman in 1982. “But the examples of that are infrequent.”

Nonetheless, such businesses seem to be thriving locally.

From a sale to a store

Mannequin, a boutique stuffed with women’s clothing, accessories, art and gift items, was born of an annual one-day sale of donated clothing started in 1964 by the Cincinnati Chapter of the National Council of Jewish Women. Rouse took over the fund­raiser in 2001 and started holding two sales per year. Last year Rick Kimbler, principal of NorthPointe Group, offered her 2,000 square feet at 1405 Vine St. that the developer owns in Over-the-Rhine. She moved the goods from another NorthPointe-owned property where she had been storing them to the Vine Street space and also took the store next door to open Mannequin.

The shop is open two days a week and is staffed by volunteers. Rouse has free rent this year and is setting aside money to start paying rent in 2012. Eventually, she hopes to hire a paid staffer to run the place.

“As we make more money, I’m not afraid to invest in people and professionalism,” said Rouse, an active community volunteer who taught marketing and advertising at the University of Cincinnati for 30 years. (Her husband, Jack Rouse, the former CEO of Jack Rouse Associates, is leading the effort to renovate Music Hall.)

The store makes about $1,500 per weekend, which Rouse donates to a handful of local social service agencies including FreeStore FoodBank, First Step Home, Lighthouse Youth Services, Tender Mercies and the UCAN Spay/Neuter Clinic.

Proceeds from Roc-A-Fellas and New 2 You Thrift Store, on the other hand, are used to support international ministries in Nigeria and Mexico. They are “biznistries,” divisions of Self Sustaining Enterprises, or SSE, a Cincinnati nonprofit that works to create local jobs through the businesses and generate money that can be used in the international ministries it supports.

“Even though there are people who only have so much to give, they’re still spending money. So somebody’s going to be making (money),” said Chuck Proudfit, CEO of SkillSource business consultancy and an SSE board member.

Both businesses were launched in 2003, shortly after SSE was formed, and have thrived. New 2 You now has three locations, and Roc-A-Fellas has doubled its square footage to roughly 3,000 square feet since opening. Last year, the businesses generated $80,000 in profits that were donated to SSE’s ministry work, up from $20,000 in 2009, Proudfit said. The SSE businesses employ between 30 and 40 people, depending on seasonal needs, he said.

“We’ve reached a tipping point with these little enterprises,” Proudfit said.

Schorr said it’s no surprise that all three of the businesses are retail operations.

“Retail business models often are used because they are relatively simple. They’re relatively easy to operate and they often come with almost a how-to manual,” Schorr said.

But the key with such businesses, he said, is reaching the right scale.

“The challenge is getting it to the point where it’s large enough from a revenue standpoint where it’s successful,” he said.

Patience brings profit

The other challenge, Proudfit said, is patience. Just like any startup, it can take years for these businesses to gain a foothold in the marketplace, he said.

That’s one of the reasons he thinks the SSE model might have more staying power than many social enterprises started by nonprofits themselves.

“If nonprofits make an assumption that they can open up an enterprise, open the door and make money, it’s not that easy,” he said. “Sometimes you have to steward these little enterprises through a really tough market environment.”

Rouse estimates she spends about 30 hours a week on Mannequin, getting donations and purchasing select items to sell in the store, not to mention the hours the boutique is open. She’s also hosting more and more special events, where she opens the shop at night for a group of women friends who socialize, shop and then go to dinner at a nearby restaurant in Over-the-Rhine.

She has such an overflow of donations that Rookwood Pottery shareholders Martin and Marilyn Wade gave her the use of 2,000 square feet of space in the Rookwood Pottery manufacturing location a few blocks away.

Proudfit says he thinks such enterprises could represent the future of philanthropy as people without big bank accounts look for ways to give back. Even the wait staff at Roc-A-Fellas decided to donate the tips collected there to SSE’s ministry work, he said. And SSE is looking to form a network for such businesses, tentatively called the International Biznistry Network, he said.

“It’s just another way to engage more people,” said James Yunker, CEO of Smith Beers Yunker & Co., a local consultancy for nonprofits. “And hopefully, those who frequent those biznistries will catch the philanthropic bug and maybe make some direct gifts.”